A time capsule of the greatest financial mania in the history of mankind, told in real-time by regular folks and patriots. May future generations better understand the madness of crowds, and how power and money corrupt.

August 20, 2008

28 comments:

Anonymous
said...

Because Organized Crime is still running the Real Estate business.If your home won't sell, don't worry, we'll buy it. Or, we'll turn it into Section 8. Or, CASH for your HOUSE! Any Real Estate that offers to buy your house is a "flipper" not really a real estate office.

Housing starts haven't even yet had the brief bounce on the way to the bottom that we've seen in past housing downturns. In the past, after the bounce, housing starts go even lower for a couple years then start back up before the housing prices do. We are several years away from this based on past action.

Because there is an excess inventory of 3.5 million empty houses that are'nt selling plus thousands more forclosed houses coming on the market every day. There was excess inventory starting to build even while banks were giving money to anyone who walked in the door. Now the easy money is gone and may never be back. It certainly will be decades before bankers forget that "liars loans" are a bad idea. There is about two trillion dollars of household debt that must be written off or paid back before the economy can begin expanding again. The savings rate must get back to where it was before the boom which means a drastic cut in consumer spending. If you don't believe that the savings rate must get back to historic norms feel free to explain why it's different this time.

I think we're a decade away from a bottom. After sub-prime and alt-A, and working off the excess inventory and second homes, then we go to much higher unemployment, then we go to much much higher interest rates for the final nails in the coffin. As hyperinflation starts and interest rates go to 50% then the only way to buy a house will be with cash. The bond market will be history at that point.

i read this blog not to discern whether or not it is a good time to buy, but rather to find out if/when other people finally understand the logical ramifications of the sour economy's influence on decisions by average people like me.

i like to live close to work to save money and time. but as a contractor, i never really know where that will be in the future. in non-bizarro world America, i might even consider paying a premium to RENT because you still save money on car maintenance and gas. but BUYING a house is still 2x more expensive than RENTING! so what is the point of even considering to buy a home?

i'm a former real estate broker now in the computer industry, and i ask- why does anyone actually care about the housing market at all? bizarro if ask me...

Here in Long Island prices are completely disconnected from what people are earning. Houses go for $400-500K in areas where people are making $60-70K. (Zillow says in 2000 such homes went for $200-250K)

School taxes are enormous (five figures for the more overvalued properties) and go up every year. Be a renter, let your landlord pay school taxes!

People on Long Island who bought when the REIC said it was the perfect time are subdividing their houses and leasing their basements and attics! It's not easy to pay the heating oil bill and those nasty school taxes! The car-dependence of most LI suburbs also takes its toll on house values.

Prices are down double digits & rates are still decent at the 6-7% range.

If you wait, the risk of paying a high rate is significant.

But higher rates will mean further drops in price & more seller incentives for homes that must be sold.

The scarcity of credit will also be a factor in the future. Fanny/Freddie are pulling back, FHA can only do so much, and VA is restricted to veterans. So your recourse is to save for a bigger down payment, clean up your credit and/or just keep renting and invest (which is also challenge in current market conditions).

In whatever you do, do your homework and weigh all the pros & cons and keeping the lessons of a burst bubble in mind when you do your cost benefit analysis.

Prices are still way out of line. I live in Chicago and when I ask sellers how much they are asking and it is way too much. I just talked to several sellers and the range is from 400K to 799K in an average neighborhood.

God only knows when the real estate market will correct back into normal levels. I am renting a one bedroom apartment for $670 (heat and water included!). I will wait until I can buy a decent home (three bedrooms and two full bath with a two car garage) for 230K to 260K. Right now they are asking for 400K and back in 2003 to 2005 (the peak of the bubble) they could easily sell them for 500K to 699K!

Anon idiot said:i'm a former real estate broker now in the computer industry, and i ask- why does anyone actually care about the housing market at all? bizarro if ask me...

Stick to computers jackass, I can see why you failed as a broker (not that good brokers are all that smart). Why do we care? Because housing is the one things that cost us the ost in life. Because it is the biggest cost, it is one of the biggest concerns in terms of the economy. Because it is one of the biggest concerns of the economy it has totally fucked our economy now.

The only logical analogy to your dumb question is, and ask yourself the next time you are on the toilet. I don't understand when done taking a shit why people bother with toilet paper?

I'd like to post this point for consideration on why it may be a good time for some people to buy. (No, I'm not a Realtor or employed in the any realty/banking field.) I recently bought a home (May 2008) in SoCal. An REO, 30% off peak price; 20% down payment, 30 year fixed at 5.875%. I jumped in rather than wait to see what 2009 and beyond brought because 1. the mortgage/prop tax/insurance payment was the same as I've been paying in rent and 2.I'm on track to own the home outright in 25 years, when I'm set to retire. (Using a bi-weekly payment method.) You don't have to buy at the absolute bottom to come out ahead if you're in this for the long haul (i.e. this is your final home purchase.)

Oh. Some Anon Idiot can only say reply calling me the same. Maybe you didn't fail at real estate but you would have just like the rest of the ramen eaters. And just like your question about why we care about housing. If you were still a broker you would probably saying there is no problem. Back to my point and you had no response to my answer to your question. Nothing to say. Is your question still bazarro. Is it bazarro to be concerned about the economy. You fucking idiot.

Here in Long Island prices are completely disconnected from what people are earning. Houses go for $400-500K in areas where people are making $60-70K. (Zillow says in 2000 such homes went for $200-250K)

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$60 to $70K per person. Which means $120K to $140K per household. $60K is basically an entry level job in NY. $100K is mid manager. $150K is senior manager. A couple of people each mid-career can easily afford a $500K home, without the need for ninja loans.

"Stick to computers [expletive deleted], I can see why you failed as a broker (not that good brokers are all that smart). Why do we care? Because housing is the one things that cost us the ost in life. Because it is the biggest cost, it is one of the biggest concerns in terms of the economy. Because it is one of the biggest concerns of the economy it has totally fucked our economy now.

The only logical analogy to your dumb question is, and ask yourself the next time you are on the toilet. I don't understand when done taking a shit why people bother with toilet paper?"

AND

"Oh. Some Anon Idiot can only say reply calling me the same. Maybe you didn't fail at real estate but you would have just like the rest of the ramen eaters. And just like your question about why we care about housing. If you were still a broker you would probably saying there is no problem. Back to my point and you had no response to my answer to your question. Nothing to say. Is your question still bazarro. Is it bazarro to be concerned about the economy. You [expletive deleted] idiot."

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How can I answer your question about the economy? You seem to imply that I don't care about the economy. I care about it a lot! Just not too much. But you make the incorrect assumption that housing costs are high, that they are the "biggest cost in life." In this area they are NOT that high - as long as you rent. Honestly, they just don't seem that big a cost to me, a renter. In fact, last year I lowered my rent by 15%, despite the fact that an equal size place would cost 2x to 3x as much with all associated costs (mortgage, HOA, maintenance, taxes).

So I just don't care too much about housing. Housing costs need not be high. They are high because people care way TOO much about housing. If they didn't care about it so much, they would become more rational about home buying decisions. They would take more time, shop around a lot, and as a result find much better deals.

It is true, I failed at real estate. I left the RE industry now more than a decade ago because I told the truth alot. I told buyers exactly why I wouldn't buy the homes I had just shown them. I told sellers why their homes weren't worth as much as they thought. No, I didn't sell many homes. And yes, I ate a lot of Ramen then. But I don't eat Ramen now. (that stuff is gross!). And if I were a broker now, I would have told my buyers and sellers the same thing I told them then: "What's so bad about renting? What's so bad about NOT wasting all your time and money fixing your own property and just letting someone else do it at half-price? Buying a home is probably about the single most illogical thing one can do nowadays." I said that then and now it has only become even truer.

Last, I cede to you as the far greater Anon Idiot. You certainly know your expletives. Why are you so angry? And what does your toilet example have to do with your argument? Are you in the 5th grade or something? Time for you to go to school. Class is in session.